from the destroying-lives,-destroying-peace dept

As Techdirt readers well know, Big Pharma really hates compulsory licensing of its patented drugs, where a country steps in and allows an expensive drug to be made more cheaply in order to provide wider access for its people. Such massive pressure is applied to nations contemplating this move, that even global giants like India quail. A new story is unfolding that reveals just how far companies are prepared to go in order to prevent it from happening. It concerns Colombia's possible use of a compulsory license for the drug imatinib, sold under the name Glivec, and used to treat leukemia. Despite the fact that the company holding patents on the drug, Novartis, is Swiss, the US has started to lean heavily on Colombia in order to persuade it not to go ahead with the move.

KEI has obtained a copy of a letter from Andrés Floréz at the Embassy of Colombia in Washington, DC, to the Minister of Health in Colombia, reporting on a meeting between embassy officials and Everett Eissenstat. He's the Chief International Trade Counsel for the US Senate Committee on Finance, under Senator Orrin Hatch. Apparently, Eissenstat conveyed quite forcefully his views on the negative consequences for Colombia if it decided to issue a compulsory license on the cancer drug Glivec:

Eissenstat mentioned that although Novartis is not an American company, the US pharmaceutical industry was very worried about the possibility that the case would become a precedent that could be applied to any patent in any industry which, according to him, could lead to the reputation of our country's respect for intellectual property rights being viewed as impaired and Colombia becoming one among those countries that would have special treatment...

Einssenstat also mentioned that, if the Ministry of Health does not correct this situation, the US pharmaceutical industry and related interest groups could become very vocal and interfere with other interests that Colombia could have in the US.

Nice little country you have there -- be a shame if something happened to it. Stat News mentioned a couple of forms that "special treatment" might take:

A free-trade treaty between the two countries went into effect four years ago, which obligates Colombia to comply with various international trade laws. Florez also cautioned that issuing a compulsory license for the Novartis drug may "weaken support" for bringing Colombia into the Trans-Pacific Partnership, a trade pact between 12 countries in the Asia and Pacific regions that must still be approved by Congress.

Senator Hatch was so opposed to the idea of a compulsory license on the patent for a $40+ Billion cancer drug made by a Swiss company that he was willing to find an extremely sensitive area for the Colombian people and use it as leverage. The [Paz Colombia] peace process in question is the hopeful conclusion to decades of fighting in the country with guerrilla rebels that has led to hundreds of thousands of deaths.

The US is willing to jeopardize the entire "Paz Colombia" peace plan, all because Big Pharma is outraged a developing country might dare to use its international right to issue a compulsory license. As KEI Director James Love commented:

The use of these back channel methods of conveying threats and pressure is common, and the leak of these two letters provides insight into why governments that have the right to issue compulsory licenses rarely do. The fact that after meeting with Eissenstat, the Colombian Embassy connects the patent dispute to the funding of the Colombian peace process illustrates how the United States can link health and national security together in ways that a harmful to both.

It can surely only be a matter of time before Colombia obediently toes the line, and recognizes that Big Pharma's patents and profits are much more important than the health and lives of its people.

from the legacy-artists-attempt-to-control-how-culture-works dept

The US Dept. of Commerce has been collecting input on IP issues through its Internet Policy Task Force (the commenting period wrapped up Dec. 5, 2013). One of the suggestions it sought input on was the creation of a compulsory license that would allow artists to remix the creations of others by simply paying a flat fee, much in the way cover versions are handled now.

In a letter signed by Steven Tyler of Aerosmith and music attorney Dina LaPolt (and echoed by like minded artists like Don Henley, Joe Walsh, Sting, Deadmau5 [somewhat disappointing] and entities like BMI, SESCAC, ASCAP, etc.), LaPolt details their opposition to streamlined remix licensing. The rationale propelling this letter is nothing short of bizarre.

First off, LaPolt asserts that artists should be able to control use of their music.

Approval is by far the most important right that an artist possesses… If an artist or songwriter does not want his or her music used in a certain way, no amount of money will change his or her mind.

Artists can, and should continue to be able to, deny a use that they do not agree with. For one, an artist should be able to turn down uses in connection with messages that the artist finds objectionable…

LaPolt's parade of horribles follows this assertion. Melissa Etheridge remixed with homophobic slurs. Ted Nugent coupled with anti-gun sentiments. Sting's soulful voice draped over a National Beef Council ad. (The last one I made up.) The possibilities are endless.

But this concern is essentially meaningless. An unlicensed remix can still do all these things. The only difference is that the original artist goes unpaid. There's only one way to control how people will use your creation, and that's to lock it away unreleased. Rejecting a compulsory license simply cuts off a potential revenue stream, and instead of protecting artists from derivative works they don't approve of, it simply ensures they'll never be paid for the derivative works that will be created without their explicit blessing.

LaPolt seems to believe that artists will actually do the only thing that can protect them from unsavory derivative works.

Without a doubt, requiring a compulsory license for derivatives would discourage many artists from releasing their work in the first place. Steven and the other artists who have expressed support for our comments have stated that they probably would have withheld some of their work if they knew that one day they would be required to give up their right to approve derivative uses.

"Would probably have withheld some of their work." That's hardly a powerful supporting statement, especially when reported secondhand. I have serious doubts any of these artists would have "withheld" any creations because they were worried someone might offensively remix them. Artists create, and stashing it in the archives isn't nearly as satisfying as releasing it to the public, even if there's a small chance someone might crank out an unlicensed derivative work that offends their sensibilities. (Not only that, but considering the roster of supporting voices are all major label artists, it's highly unlikely the decision to release or not release would have been completely in their hands.)

Moving on, LaPolt insists there's already a "robust marketplace" for remixes, by which she must mean there's a limited marketplace that pays handsomely for a select few artists.

The thing is: LaPolt and her co-signers can't prevent derivative works. An vibrant mashup scene is nearing two decades of doing whatever it wants with the works of others. These artists know they can't sell what they've made, but they've found other ways (donations, live gigs, DJ gigs, themed events) to turn entirely derivative works into a viable form of income. Any DJ worth his salt has dropped dubplates and white labels that contain unlicensed mixes into their DJ sets. And they've seen others do the same with their works, spinning off their own remixes and mashups, all without permission. (And returned the favor by including these unlicensed remixes of their own work into their DJ sets.) There's little to no evidence out there that suggests DJ/producers are shoving new tracks into the sock drawer just to keep thousands of bedroom producers from cranking out terrible, unlicensed remixes.

Artists fighting against this sort of license are not only eliminating a revenue stream, they're ignoring the history of creative works. The phrase "everything is a remix" isn't just something conjured out of thin air and wishful thinking. Culture builds on culture and not every derivative/remix is going to make the original artists happy. But that's the way it goes. The only way to prevent reinvention is to lock the original invention up and resign it the self-imposed obscurity of the studio vault. That's the ultimate veto and, compulsory license or no, that's the only way to prevent the inevitable. Fighting this just leaves artists with the relatively worthless power to say "no."

from the prince-world dept

Ah, Prince. The artist, who is notoriously controlling concerning his own music, has apparently decided that the latest evil in the world is cover songs and the compulsory licenses that make them possible. As you may or may not know, it's legal to do cover songs, because of compulsory licensing laws that say as long as you pay a set fee, you can cover any song (why such laws don't apply to samples is weird, and leads to the bizarre situation in which it's legal to cover an entire song, but do just a second of the song and you may be in legal trouble). Either way, Prince is not a fan. In an appearance on the George Lopez show (embedded below), Prince comes out against the entire idea of cover songs because, apparently, it destroys the original:

Prince: I don't mind fans singing the songs... My problem is when the industry "covers" the music. See covering the music means that your version doesn't exist anymore. A lot of times, people think that I'm doing Sinead O'Connor's song and Chaka Khan's song when in fact I wrote those songs. And it's okay when my friends ask to do them, but there's this thing called the compulsory license law, which allows artists, through the record companies, to take your music, at will, without your permission. And that doesn't exist in any other artform, be it books, movies -- there's only one version of "Law and Order' (crowd laughs). There are several versions of "Kiss" and "Purple Rain."

George Lopez: There should be only one version of music.

Prince (sarcastically): You would think... (crowd laughs)

Hmm. Well. So, apparently Prince's version of "Purple Rain" no longer exists. I had no idea. As for Prince's final point, why would you think that? Why is there a problem of anyone doing a cover? Rather than the original no longer existing, it actually exists more, in that more people are aware of and interested in the original.

Of course, all this made me curious. Surely, Prince has covered others songs before. And, in fact, he has. Many, many, many times. Some folks on the Prince fan boards have made a nice list of all the many songs that Prince has apparently "destroyed" of other artists by covering them either for albums or live shows. Of course, perhaps he did this out of spite for those other artists. In fact, Prince has been accused of covering the Foo Fighters during his Superbowl performance to "get revenge" on the Foo Fighters for covering one of his songs. Some revenge. "Destroying" their original song like that in front of the largest TV audience around. Must suck.

from the why-bother? dept

I have significant problems with any sort of compulsory licensing scheme, which basically gives the power to a tiny group of people to establish the business models and cost structures for an entire industry. It's as if people who support compulsory licensing don't believe the free market works at all. The latest example of this is that the Copyright Royalty Board, which controls pretty much everything having to do with copyright compulsory licenses (despite often showing little to no understanding of technology) is now saying that anyone who broadcasts music online should have to submit full playlist data on every song they play to SoundExchange, the RIAA-spinoff in charge of "distributing" (if you call what it does distributing) money to copyright holders. While some entities already do this, it does seem like quite a burden for others, but that's what you get when you let a small group of people decide all the rules.

from the let's-go-through-the-details dept

We already had a post discussing how we find it troubling that Warner Music has not been more open in discussing its proposed "voluntary license" plan. It was a neat little rhetorical trick by Warner to claim that we weren't being fair in slamming the proposal so early, when the company itself had kept the plans secret all along. Would they have preferred until they rolled out the "completed" plan for us to point out its problems?

Either way, while we discussed why it was a bad plan in our original post, some are not convinced it's a bad plan. Matt Asay, over at News.com gives his qualified support for the plan, while Nate Anderson at Ars Technica pretty much takes Warner's party line that we're being unfair in criticizing this idea before it's had a chance to air out. Of course, Anderson conveniently skips the fact that Warner wasn't letting the plan air out. These discussions were being held without important stakeholders, where key problems with the plan would not get discussed. Besides, given how many times the major record labels have come up with new great plans that actually made life worse for consumers, I would think the industry has to earn the right to be given the benefit of the doubt. We've been fooled too many times.

Anderson also mischaracterizes our position greatly -- first claiming that we're only kicking the plan because of our "knee-jerk churlishness" and need "to jackboot the music industry in the proverbial groin every time it comes up with a new idea." That makes for nice prose, but pretty much ignores any substance behind our position. In fact, Anderson seems to claim the only reason we dislike the plan is because we called it a "tax" insisting that was the "sum total" of our analysis. This, of course, is untrue -- and Anderson and his co-authors at Ars Technica are well aware of the more than a decade we've put into analyzing music industry business models, including cheering on good models (and even cheering on the big record labels when they do something right). Why Anderson and Ars Technica chose to misrepresent all of that (while throwing in some unwarranted insults), I do not know, but I'll take the blame, and suggest that perhaps we did not explain our position clearly.

So, I'll try again.

Why A "Voluntary License" Is A Bad Idea

Yes, the industry gets upset when anyone calls this a "tax" so I'll use the "voluntary license" term, even though tax is much more accurate. A true voluntary license wouldn't require everyone having a certain provider to opt-in, but that's exactly what this plan would require. In fact, as the slides indicate, eventually it would basically require all ISPs to "opt-in" forcing all of their members to "opt-in." Suddenly, everyone has to pay. That's not a voluntary license. It's a tax.

However, even if we step back and pretend it's really a voluntary license, and even if we grant the premise that all record labels sign up for this plan, you've still created a mess that doesn't help anyone. First, you have to set up a huge bureaucracy to manage this process -- and it is quite a process. You need someone to monitor everything that's happening online to determine whose music is actually being shared and played. You have to somehow create methods to accurately determine -- from the biggest to the smallest -- who actually deserves payment. And, if you don't think that process won't be gamed, you apparently just got on the internet in the last year. As soon as there's the ability to get paid out just because more people are sharing your music, just watch the games that folks take to make sure they get a larger cut. The system will punish honest artists, and reward the scammers.

Next, you have to set up another bureaucracy in charge of managing all of this money, and figuring out how to dole it out (while keeping a cut for itself). Even if this operation is, as planned, a "non-profit" -- don't think it will be cheap. You're talking about a huge operation that is tasked with determining how much money every musician in the world is owed, and then trying to get that money to them. Given the recording industry's history with not being able to "find" some big name musicians, just take a guess how well this will work here? Instead, there's a better than even chance that eventually, the big record labels will note that it's "easier" and "more efficient" for this "third party" bureaucracy to just send a big check to the labels each month, and let them dole out the money to their artists (after taking a cut, of course).

And, of course, there's the whole question of what the rules will be for determining how much each artist will make. Over the summer, we had a look at the sausage making process for compulsory licensing, and it's not pretty. Basically, you get backroom deals combined with senile "copyright board" judges who don't understand the marketplace or technology making final determinations on exactly how much every action is worth. We've already got too many different compulsory licenses to count. All this will really be doing is adding yet another one to the list. It doesn't simplify things -- it complicates them even more. The recording industry, of course, loves that complication. It lets them come in and "handle" things, which most of the time means twisting the rules to its advantage.

Yes, the EFF and Public Knowledge favors some form of "voluntary license," and Warner Music and Griffin are quick to play that up, as if their plan has won some kind of public approval. But the reality is quite different. Someone from Public Knowledge was quick to show up in our comments (where Warner Music still fears to tread, for some reason) to point out that they have not endorsed this plan, but are open to discussions on it. The EFF has also been cautious, noting in the past that it does not support a license that is called voluntary, but is really compulsory. In the end, though, I simply disagree with the EFF on the benefits of any sort of licensing plan. Fred von Lohmann once explained his support to me as such: "A voluntary licensing plan basically gets the issue off of consumers, and lets everyone else fight it out in court."

That sounds nice, but ignores the unintended consequences. The big record labels have shown over and over again that they can twist the process to their advantage. So while it may be true that consumers won't be getting sued any more, it doesn't mean they won't get screwed. The plans will weigh heavily to the advantage of the established recording industry with its leverage in the space. It's a really, really sad situation that we should feel like rewarding the industry for its decade of actively fighting against progress by saying "well, phew, as long as you agree to stop suing, here's as huge chunk of money."

Have you noticed a pattern here? What you're doing is setting up a big, centrally planned and operated bureau of music, that officially determines the business model of the recording industry, figures out who gets paid, collects the money and pays some money out. The same record industry that has fought so hard against any innovation remains in charge and will have tremendous sway in setting the "rules." The plan leaves no room for creativity. It leaves no room for innovation. It's basically picking the only business model and encoding it in stone.

Oh, and did we mention it's only for music? Next we'll have to create another huge bureaucracy and "license" for movies. And for television. And, what about non-television, non-movie video content? Surely the Star Wars kid deserves his cut? And, newspapers? Can't forget the newspapers. After all, they need the money, so we might as well add a license for news. And, if that's going to happen, then certainly us bloggers should get our cut as well. Everyone, line right up!

This is a bad plan that will create a nightmare bureaucracy while making people pay a lot more, without doing much to actually reward musicians.

And, worst of all, it's totally unnecessary.

So What's The Alternative?

But then, as people will be quick to note: what's the alternative? If we don't do this, then how will musicians get paid? This, of course, is a logic fallacy that assumes incorrectly that musicians only make money from the direct sale of music. Musicians that are already embracing business models based on a solid understanding of information economics are discovering they can do quite well (almost always better than under the old model). And, yes, this applies to both big and small musicians.

The basics are pretty straightforward, and if you're new here, you should follow the links to understand them more thoroughly. But musicians get to use their already-created content, which are effectively infinite due to its digital nature, to grow the market for all of the scarcities that surround them. This can include physical goods, but the bigger money is in non-tangible scarce goods that simply can't be copied: access to the musicians, seats at a concert, the ability to create new music and many other opportunities that have the side benefit of more closely tying fans to the musician. And this doesn't need to be complicated. You could set the whole thing up as a subscription fan club with different levels providing different scarce benefits -- and everyone wins.

The simple fact is that these business models are already working for many, many musicians. Hardly a day goes by where someone doesn't show us yet another example of musicians creatively coming up with new and unique business models that embrace these economic principles, and which allow them to make even more money than they did in the past. And, yes, there's still room for the record labels if they want to act as true partners, helping musicians implement these business models and enabling musicians to better connect with their true fans.

Of course, that involves some work. It involves a real change in how business is done. It may not be as easy as a plan that lets the record labels sit back and collect large sums of money with promises to distribute it, but it can be a lot more profitable for everyone in the long run. It's more efficient. It allows true competition to take place in the marketplace, rather than letting the market set the winning model. It lets people share music without worry of a lawsuit (in fact, if the business model is implemented correctly, it gets musicians to encourage more file sharing as it helps build up a larger audience for those scarce goods). Without having to fund those huge bureaucracies, there's also much more money that can go to the actual artists as well. Plus, fans feel better knowing that their money actually is supporting the artists, rather than a central bureaucracy.

But the important point is that this plan is working today for many different players in the music world, including some smarter labels and (most importantly) the fans. The only ones it's not working for are the big record labels who have refused to recognize the opportunities -- and the bands that rely on those labels for guidance. We shouldn't be setting up a system to reward those folks, just as everyone else is figuring out how to succeed.

Let The Market Work

Jim Griffin and Warner Music have been working behind closed doors, trying to craft the perfect business model that preserves their business. During that same period, a large number of folks have been out here, actually involved in an open conversation about business models that are working today. We've seen artist after artist learn (on purpose or accidentally) how to embrace these concepts and how to succeed beyond anything they ever saw in the past.

Let's not kill that off with a plan worked out in the backrooms that will almost definitely have significant unintended consequences. Let's let the market work its magic transparently.

Griffin's complaint about our post (delivered via Warner Music) was that it was unfair of us to criticize a plan so early in the planning stages. We made no such complaint here when we first laid out these discussions so many years ago. We encouraged people to criticize and discuss the plans -- and for people to test them out. That resulted in more discussions and more experiments and adjustments and we're seeing the end result of that now -- with many, many success stories. Griffin's plan allows for no such experimentation. It's an all or nothing plan, and if you accept it as currently laid out, you're going all in when half the rules of the game are being established without the players' knowledge.

That's a bad, bad bet.

If Jim Griffin wants us to hold back on criticizing his plan, why can't he and Warner hold back on implementing their plan that effectively blocks out the market forces that are already succeeding?

from the well,-not-really... dept

Last week, we wrote about the details showing how Radiohead's experiments with a new business model was successful. However, a couple of readers sent in an article at The Register, which looked into Radiohead's success, and concluded that musicians shouldn't be happy about it, because Radiohead's success may destroy their "hard-fought" collective bargaining arrangements.

There is some amount of truth in this, but it shouldn't be seen as a bad thing for musicians. Part of Radiohead's success was that it, indeed, was able to get certain royalty collections groups to effectively "bend the rules" for the experiment. The Register seems to argue that this is a bad thing, as it will destroy the validity of those royalty groups. However, that's not a bad thing for musicians at all. We've already explained why we think compulsory licenses are a bad idea, creating a bureaucratic nightmare where only the lawyers really benefit. More importantly, they serve as a complex patchwork system to guarantee an old and obsolete business model -- which is why Radiohead had to work around them. Because of this, you get various collections societies making ridiculous claims about representing artists, when some artists don't agree with their stance at all. Yet, because it's "compulsory" many artists have no choice.

Cracking the legitimacy of these royalty collecting societies isn't damaging to musicians. It's just the first step in helping them to embrace much better business models.

from the compulsory-mess dept

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

from the keeping-it-straight dept

The copyright system was never designed for modern technology -- which is why every time some new technology comes along, there are all these legal battles until some awful patch (often in the form of compulsory licensing) is applied. However, because there have been so many new technology changes over the years, and so many different people demanding a piece of the pie, these days the compulsory licensing and royalty process for any sort of music licensing is so complex that almost no one can actually understand what's going on. At any moment there are a bunch of different battles over the various rates that should be used, and over whether or not they apply to some new technology. One of those many battles has come to at least a temporary settlement, as seven years of fighting over mechanical royalty rates on interactive streaming and limited download services have been agreed to by all parties involved. The RIAA put out some PR happy quote about how this will "support innovative business models." Sorry, but when you're talking about a seven-year dispute to work out these rates, you've probably already killed off those innovative business models.

from the legal-complexities dept

What is it with politicians who position themselves being big pro-copyright supporters being caught potentially infringing on copyright themselves? Singer Jackson Browne, who is apparently a supporter of Senator Obama's presidential campaign, has sued Senator McCain for allegedly using a Browne song in an advertisement without permission. Of course, this isn't as clear cut as you might believe. McCain's campaign points out that the ad isn't actually from the campaign. And, while it's true that there's no compulsory license for pairing a song with a video, this is almost certainly infringement -- but Browne's claim of an implied endorsement may not get very far, because there are ways that it's quite likely that McCain could make use of Browne's song without Browne's permission.

Welcome to the bizarre, arcane, and confusing world of copyright licenses.

Depending on whether or not Browne's music is licensed to a performance rights organization like ASCAP, BMI or SESAC (and chances are, they are), McCain's campaign could most likely pay a royalty to them to use one of Browne's songs at an event (if not in a commercial). And, since there is compulsory licensing on covers of songs, in theory, McCain's campaign could have someone else cover Browne's song at a campaign stop, and Browne wouldn't have much he could do to stop it (again, other than make a stink out of it, getting McCain to back down). While it does seem as though there is an infringement claim here (and McCain's campaign knows it's not wise to turn this into a big deal), this story does highlight just how ridiculous various music licensing has become these days. Though, still, in general you would think that any political campaign (or its surrogates) would at least be a little careful to avoid using music from someone who supports the other guy -- as it's just asking for a PR headache.

from the watch-for-the-appeal dept

In the latest of many arguments about the various rights and payments companies need to pay for streaming music online, a district court has ruled that AOL, Yahoo and RealNetworks most likely owe millions to ASCAP for songs that they streamed to users between 2002 and today (and continuing on to 2009). This has nothing to do with the record labels -- ASCAP represents the songwriters -- but is yet another extraneous "license" where the terms are hardly clear, but basically serve to make it more difficult for anyone to play music. It was never in question that these sites would need to pay some kind of royalty -- the question was how much. The odd part of this ruling, though, is that the rate set by the judge is likely to be higher than the rate that traditional terrestrial radio pays. If there ever were a formula for making companies less interested in streaming music online -- this might be it. Of course, it's quite likely that this ruling will be appealed, so it's far from over.